A.M. Best Assigns Ratings to Tower Life (N.Z.) Limited.OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of "a-" to Tower Life (N.Z.) Limited (TLNZ) (New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. ). The outlook for both ratings is stable. The ratings reflect TLNZ's stable operating performance, the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. growth trend of its group risk business and its enhanced profile as part of the TOWER brand. The ratings also consider the company's effective asset/liability management Asset/Liability Management A technique companies employ in coordinating the management of assets and liabilities so that an adequate return may be earned. Also known as "surplus management. . The company's group risk portfolio (the only portfolio that is open to significant levels of new business) grew robustly with a 33% increase in in-force premiums for 12 months to September 2006. TLNZ was the third-largest provider in the group risk market and captured approximately 16% of the group risk premiums. A.M. Best expects that TLNZ will further strengthen its distribution capabilities and product diversification through strategic alliances and cross-selling initiatives within TOWER Group. TLNZ has consistently reported positive and increasing net income over the past five years due to its favorable product and investment performance, as well as its commitment to expense management. The company anticipates that the profit stream from its closed book of participating business will remain stable going forward. Asset/liability management has been an integral strategy of TLNZ's investment philosophy. The company has utilized derivatives to mitigate interest rate risks, thereby alleviating operating volatility. Partially offsetting these positive rating factors are the company's small absolute size of capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , strong market competition and uncertainties in relation to life insurance taxation reforms that could impact TLNZ's profit margins. The company's risk-adjusted capitalization is commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with the assigned ratings. However, its absolute capitalization is relatively smaller than similarly rated life insurance companies in New Zealand. To further support its growth in the group risk segment, A.M. Best believes that the strengthening of TLNZ's risk-based capitalization through higher retention of operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before may be required. Given TLNZ's strategic focus on group risk business, strong market competition could challenge its ability to sustain profitable growth in the mid to long term. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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